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The Land Budgeting Dilemma

Land budgeting is the crucial link between the population projections and the amount of land designated for development, but as noted, the process is opaque and varies from municipality to municipality. This makes it difficult for observers to grasp how the process works.

Allocating population projections

As part of the Growth Plan implementation, municipal planners in the upper- and single-tier municipalities allocate the population and employment projections among their constituent lower-tier municipalities. For example, Peel Region allocates the regional projections to Caledon, Brampton, and Mississauga.

Housing types and employment

There is no one-size-fits-all approach to land budgeting and the Province did not provide any guidelines to municipalities as part of the Plan. This means that the municipal planners or planning consultants who prepared the land budgets used a variety of assumptions about how to accommodate growth. These differences are reflected in the amount of land finally set aside for urbanization by different municipalities.

For example, Halton, Durham, and York regions set aside land for urban expansion based on an anticipation of continuing high demand for single detached houses, assuming a continuation of past trends in housing demand.

In contrast, Waterloo Region forecast an increased demand for medium- and high-density housing and assumed that much of the demand for detached housing could be met by existing houses that will be vacated over time as their owners age. Because of these assumptions, the Region set aside relatively little new land for greenfield development.[1]

Whether municipalities try to address changing demographic shifts or assume a continuation of historical trends in deciding what type of housing new residents will occupy in the future has a direct impact on the amount of land that is zoned as urban.

Municipalities also set aside land for employment purposes based on Growth Plan projections for 1.8 million jobs across the Greater Golden Horseshoe. The assumptions used to forecast employment projections are more rudimentary than those for residents but as a paper on planning for employment under the Plan states: “The general approach in the guideline is based on linking future population projections to future job creation. Population growth is forecasted and employment growth is derived from that using a simple jobs-to-people ratio. The total employment growth is then broken down into the three basic categories of employment: major office employment, population-related employment, and employment lands.”

How much land is set aside matters. Infrastructure investments costing billions of dollars are made based on the projections. Municipalities and the Province may face financial challenges if the projections don’t materialize because of structural changes to the economy.

It’s also worth keeping in mind that there is a link between municipal land budgets and projections for future municipal revenues, especially because the majority of municipal revenue comes from property taxes. In rapidly growing municipalities, development charges for new housing are also an important source of revenue. If the methods used to allocate land do not reflect current demographic trends or changes in the economy, the mismatch can be costly.

The intensification target

As part of the land budgeting exercise, municipalities must also take into account the Growth Plan’s intensification requirement. It applies to residential development, not population. In most cases, the requirement is to direct 40 percent of all new residential development to already urbanized areas. However, in parts of the Outer Ring, some municipalities were given exemptions.

In his 2014 report about the effectiveness of Growth Plan for the Greater Golden Horseshoe, Ontario’s Environmental Commissioner questioned these exemptions:

Despite concerns that the default targets were themselves potentially insufficient to alter the status quo of low density development, as of November 2013, the Minister had approved alternative lower targets for 9 of the 15 (60 per cent) upper- and single-tier outer ring municipalities (see Table 5.3.1). For example, in 2011, the Minister approved an alternative intensification target for Brant County of just 15 per cent. Likewise, the ministry has approved alternative greenfield density targets for the majority of outer ring municipalities; these alternative density targets are below the level that the Ministry of Transportation suggests is needed to support “basic transit service.”

The greenfield density target and the impact of “takeouts”

Finally, the Plan requires that the new greenfield areas accommodate the projections at an average density of 50 people + jobs per hectare. The inclusion of jobs adds further uncertainty to this process, since very little is known about existing employment densities. Moreover, as with the intensification target, several municipalities in the Outer Ring have been granted permission to use lower average densities in the calculation as well as lower intensification targets (for example, 35 people + jobs per hectare in Brant County).

In determining the amount of greenfield land needed to accommodate growth, planners and consultants also make assumptions about land that cannot be developed – these areas are known as “takeouts” because they are taken out of the calculation of density (people + jobs/hectares of land). The Growth Plan allows environmentally sensitive areas such as wetlands, woodlands, and valleys to be excluded from land budget calculations. Some municipalities go beyond these requirements and “take out” other land that is unavailable for development, such as hydro corridors, golf courses, roads, and cemeteries.

This is not an academic exercise; these “takeout” numbers matter as to whether a municipality is adhering to the spirit of the Growth Plan or not.

Neptis researchers found that by using one method of calculating greenfield density, accommodating 15,000 people and jobs on 1,000 total hectares would lead to a calculated density of 23 people + jobs/hectare, while another method yields a figure of 50 people + jobs/hectare. Yet the same number of people are accommodated on the same amount of land in both cases. The difference lies in how much designated greenfield area land is excluded from the density calculation. The greater the areas of the “takeouts,” the easier it is it achieve the 50 people + jobs/hectare target.

All these factors have an impact on the determination of how much land is needed to accommodate growth. Municipalities that exclude more land from the density calculation are effectively able to develop designated greenfield area land at overall lower densities compared with municipalities that exclude only the areas and features specified in the Growth Plan.

It’s no wonder that people find this process difficult to understand and that the outcomes can vary widely. To summarize, the final land budget, which determines how much land gets designates, varies according to:

Assumptions about expected types of employment and their land requirements

Variations in the intensification target in Outer Ring municipalities

Variations in the amount of land considered undevelopable and omitted from the calculations (“takeouts”)

Variations in the greenfield density target in Outer Ring municipalities

So what has this process accomplished? How much land have municipalities designated for growth to 2031? Do they need to designate more to accommodate the population projections between 2031 and 2041 contained in Amendment 2?

[1] The Waterloo Region plan was challenged by developers who claimed that more land should be designated for development at the edge of the region. The Ontario Municipal Board ruled in favour of the developers, but the OMB decision has been appealed by the Region. As of early 2015, the matter has not been settled.